Have you ever thought that in fact collateral approach multiplies a money supply by 2?
I.g. if USD has a value then USDT backed with USD also has value - then it means that both have a value and therefore you have existing USD money supply + newly created USDT money supply
This way I can back USDTT with USDT and say that USDTT is backed with USDT an so on
USDTTT backed with USDTT
...
It shouldn't multiply the money supply if it's backed 1:1 and if there are no shenanigans, since the money in circulation will remain the same. For example, 1 USD kept in the safe equals 1 USDXXX in circulation (and vice versa). This is definitely not like USDT, where who knows what happens with the real money (USD).
The problem with your idea is that your token isn't pegged to anything. You can't create value that way. Burning ETH will only make ETH's value go up, not your token's. In other words, if you burn 1 ETH, you'll only make ETH slightly more scarce.